funds flow statement project

8/13/2019 Funds Flow statement project

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Chapter I

INTRODUCTION


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Introduction

Financial Managementis the specific area of finance dealing with the financial

decision corporations make, and the tools and analysis used to make the decisions. The

discipline as a whole may be divided between long-term and short-term decisions and

techniques. Both share the same goal of enhancing firm value by ensuring that return on

capital exceeds cost of capital, without taking excessive financial risks.

Capital investment decisions comprise the long-term choices about which

projects receive investment, whether to finance that investment with equity or debt, and

when or whether to pay dividends to shareholders. hort-term corporate finance decisions

are called working capital managementand deal with balance of current assets and

current liabilities by managing cash, inventories, and short-term borrowings and lending

!e.g., the credit terms extended to customers".

#orporate finance is closely related to managerial finance, which is slightly

broader in scope, describing the financial techniques available to all forms of business

enterprise, corporate or not.

Role of Financial Managers$

The role of a financial manager can be discussed under the following heads$

%. &ature of work

'. (orking conditions

). *mployment

+. Training, ther qualifications and dvancement

. /ob outlook

0. *arnings

1. 2elated occupations

3et us discuss each of these in a detailed manner.


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%. Nature of work

lmost every firm, government agency and organi4ation has one or more

financial managers who oversee the preparation of financial reports, direct investment

activities, and implement cash management strategies. s computers are increasingly

used to record and organi4e data, many financial managers are spending more time

developing strategies and implementing the long-term goals of their organi4ation.

The duties of financial managers vary with their specific titles, which

include controller, treasurer or finance officer, credit manager, cash manager, and risk

and insurance manager. Controllers direct the preparation of financial reports that

summari4e and forecast the organi4ation5s financial position, such as income statements,

balance sheets, and analyses of future earnings or expenses. 2egulatory authorities also in

charge of preparing special reports require controllers. ften, controllers oversee the

accounting, audit, and budget departments. Treasurers andfinance officers direct the

organi4ation5s financial goals, objectives, and budgets. They oversee the investment of

funds and manage associated risks, supervise cash management activities, execute

capital-raising strategies to support a firm5s expansion, and deal with mergers and

acquisitions. Credit managers oversee the firm5s issuance of credit. They establish

credit-rating criteria, determine credit ceilings, and monitor the collections of past-due

accounts. 6anagers speciali4ing in international finance develop financial and accounting

systems for the banking transactions of multinational organi4ations.

Cash managers monitor and control the flow of cash receipts and

disbursements to meet the business and investment needs of the firm. 7or example, cash

flow projections are needed to determine whether loans must be obtained to meet cash

requirements or whether surplus cash should be invested in interest-bearing instruments.

Risk andinsurance managersoversee programs to minimi4e risks and losses that might

arise from financial transactions and business operations undertaken by the institution.

They also manage the organi4ation5s insurance budget.


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7inancial institutions, such as commercial banks, savings and loan associations, credit

unions, and mortgage and finance companies, as lending, trusts, mortgages, and

investments, or programs, including sales, operations, or electronic financial services.

These managers may be required to solicit business, authori4e loans, and direct the

investment of funds, always adhering to tate laws and regulations.

Branch managers of financial institutions administer and manage all of the

functions of a branch office, which may include hiring personnel, approving loans and

lines of credit, establishing a rapport with the community to attract business, and assisting

customers with account problems. 7inancial managers who work for financial institutions

must keep abreast of the rapidly growing array of financial services and products.

8n addition to the general duties described above, all financial managers

perform tasks unique to their organi4ation or industry. 7or example, government financial

managers must be experts on the government appropriations and budgeting processes,

whereas healthcare financial managers must be knowledgeable about issues surrounding

healthcare financing. 6oreover, financial managers must be aware of special tax laws

and regulations that affect their industry.

7inancial managers play an increasingly important role in mergers and

consolidations and in global expansion and related financing. These areas require

extensive, speciali4ed knowledge on the part of the financial manager to reduce risks and

maximi4e profit. 7inancial managers increasingly are hired on a temporary basis to

advise senior managers on these and other matters. 8n fact, some small firms contract out

all accounting and financial functions to

The role of the financial manager, particularly in business, is changing in

response to technological advances that have significantly reduced the amount of time it

takes to produce financial reports. 7inancial managers now perform more data analysis

and use it to offer senior managers ideas on how to maximi4e profits. They often work on

teams, acting as business advisors to top management. 7inancial managers need to keep

abreast of the latest computer technology in order to increase the efficiency of their firm5s

financial operations.


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2. Working conditions

7inancial managers work in comfortable offices, often close to top

managers and to departments that develop the financial data these managers need. They

typically have direct access to state-of-the-art computer systems and information

services. 7inancial managers commonly work long hours, often up to 9 or 09 per week.

They generally are required to attend meetings of financial and economic associations

and may travel to visit subsidiary firms or to meet customers.

3. Emploment

(hile the vast majority is employed in private industry, nearly % in %9

works for the different branches of government. 8n addition, although they can be found

in every industry, approximately % out of + are employed by insurance and finance

establishments, such as banks, savings institutions, finance companies, credit unions, and

+. !raining" #t$er %ualifications and &dvancement

bachelor5s degree in finance, accounting, economics, or business

administration is the minimum academic preparation for financial managers. :owever,

many employers now seek graduates with a master5s degree, preferably in business

administration, economics, finance, or risk management. These academic programs

develop analytical skills and provide knowledge of the latest financial analysis methods

and technology.

*xperience may be more important than formal education for some

financial manager positions;notably, branch managers in banks. Banks typically fill

branch manager positions by promoting experienced loan officers and other professionals

who excel at their jobs. ther financial managers may enter the profession through

formal management training programs offered by the company.

#ontinuing education is vital for financial managers, who must cope with the growing

complexity of global trade, changes in tate laws and regulations, and the proliferation of


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new and complex financial instruments. 7irms often provide opportunities for workers to

broaden their knowledge and skills by encouraging employees to take graduate courses at

colleges and universities or attend conferences related to their specialty. 7inancial

management, banking, and credit union associations, often in cooperation with colleges

and universities, sponsor numerous national and local training programs.


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?=

@ice president of finance )01,999

Treasurer )9%,'99

ssistant vice president-finance '>',099

#ontrollerAcomptroller '0>,099

irector ''1,'99

ssistant treasurer ''),>99

ssistant controllerAcomptroller ')%,999

6anager %01,999

#ash manager %'C,+99

3arge organi4ations often pay more than small ones, and salary levels also

can depend on the type of industry and location. 6anagers in both public and private

industry receive additional compensation in the form of bonuses, which also vary

substantially by si4e of firm. eferred compensation in the form of stock options is

becoming more common, especially for senior level executives.

+. Related occupations

7inancial managers combine formal education with experience in one or

more areas of finance, such as asset management, lending, credit operations, securities

investment, or insurance risk and loss control. (orkers in other occupations requiring

similar training and skills include accountants and auditorsD budget analystsD financialanalysts and personal financial advisorsD insurance underwritersD loan counselors and

officersD securities, commodities, and financial services sales agentsD and real estate

brokers and sales agents.

Need For Study


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The study has great significance and provides benefits to various parties whom

directly or indirectly interact with the company.

8t is beneficial to management of the company by providing crystal clear picture

regarding important aspects like liquidity, leverage, activity and profitability

The study is also beneficial to employees and offers motivation by showing how

actively they are contributing for company5s growth.

The investors who are interested in investing in the company5s shares will also

get benefited by going through the study and easily take a decision whether to

invest or not invest in the company5s shares.

Objectives of the Study

To study the financial soundness of Eenting 3anco !8ndia"


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Chapter II

THEELECTRICITYREGULATORY

COMMISSIONANALYSIS

(SUBSTANTIVEISSUESRAISEDBYTHE

PUBLIC)


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ndhra


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Regulation No. 1 of 2007

!R&N/MI//I#N 0ICEN/EE /!&N-&R-/ #F ,ERF#RM&NCE

8n exercise of the powers conferred by sections %>% read with section 1

!%", 1 !'" and >0 !%" !i" of the *lectricity ct, '99) !)0 of '99)", the ndhra


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transmission services from the licensee, and persons who have applied for availing

transmission services from a transmission licensee.

!f" G*:@A*:TH means *xtra :igh @oltageA*xtra :igh Tension !voltage levelabove )),999 volts"D

!g" GErid #odeH means the set of principles and guidelines prepared in accordance

with the terms of ection >0 !%" !h" of the *lectricity ct '99)D

!h" G8*E#H means the 8ndian *lectricity Erid #ode approved by #entral *lectricity

2egulatory #ommission !#*2#" and Erid #ode specified by #entral #ommission under

clause !h" of sub-section !%" of section 1C of the ctD

!i" G


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3. O!"ECTI#E

This 2egulation lays down the performance standards to maintain certain

critical grid parameters within the permissible limits. These standards shall serve as

guidelines for tate Transmission ?tility !T?"ATransmission 3icensee to operate the

8ntra-tate Transmission ystem for providing an efficient, reliable, coordinated and

economical system of electricity supply and transmission. The main objectives of these

performance standards are$

!a". To ensure that the grid performance meets minimum standards essential for

the ?sers5 system demand and proper functioning of equipmentD

!b". To enable the ?sers to design their systems and equipment to suit the

electrical environment that they operate inD and

!c". To enhance the quality standards of the tate Transmission ystem in order

to move towards standards stipulated in or established under the authority of &ational and

tate cts and 2ules in the short term and gradually towards the international standards

in the long term.

.STANDARDS O $ERORMANCE

.1 The Transmission performance standards are classified under the following two

categories$

!a" 6andatory tandards - Those performance standards, the failure to maintain

which attracts the provisions of sub-section !'" of the section 1.

!b" esirable tandards - Those performance standards, which are desirable for

providing quality, continuity and reliability of services by the 3icensees, and though also

specified by the #ommission do not, unless provided otherwise by the #ommission from

time to time, attract the provisions of sub-section !'" of the section 1.

.2 !$efollowing standards are the mandatory standards$

!a" @oltage @ariation

!b" afety tandards


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These are statutory standards to be complied with by the 3icensee as per

*lectricity 2ules %C0 wherever not inconsistent with the ct. The new 2ules under

section ) of ct are yet to be issued by the #* in consultation with the tate

Eovernment. The standards specified in this 2egulation shall therefore be revised after

new 2ules under the ct come into effect.

.3 esirable standards too have been specified herein under section >0 !%" !i" of the ct,

with the main objective of providing quality, continuity and reliability of services to the

consumers. The #ommission shall fix the time-bound schedule for

implementationAcompliance ofAwith each parameter of these standards. The following

standards are specified herein as desirable of achievement$

!a" 7eeder vailability

!b" ub-station vailability

!c" @oltage ?nbalance

!d" &eutral @oltage isplacement !&@"

!e" @oltage @ariation 8ndex !@@8"

!f" ystem dequacy

!g" ystem ecurity

'.$HASIN% O IM$LEMENTATION

'.1 The performance standards excepting the 6andatory tandards, specified herein shall

be implemented in a phased manner in three stages as follows$

!a"


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licensee is expected to upgrade its systems. tandards marked as 3evel ' shall be

achieved during Transition tage, unless specified otherwise.

!c" 7inal tage !3evel-)"$ Two years after expiry of the Transition tage whensubstantial improvements should have been carried out and the system considered to be

in satisfactory condition with necessary capability improvement. tandards marked as

3evel ) shall be achieved during this 7inal tage.

'.2 8n all cases, where standards are specified by appropriate authorities, for example

*lectricity 2ules %C0, such standards shall be required to be complied with as specified

by that authority, may be from the preliminary stage itself.

/tandards to )e complied wit$

'.3 The #ommission specifies the following standards for T?ATransmission 3icensees$

a4 5oltage 5ariation

!i" @oltage @ariation is defined as the deviation of the root-mean-square !26"

value of the voltage from its nominal 26 value, expressed in terms of percentage.

@oltage @ariation may be either of short duration not exceeding one minute or of long

duration for a time greater than one minute.

!ii" 7or the purpose of these standards, the sustained variation in steady state

voltage exceeding one minute duration shall be considered. The specified permissible

limits of sustained voltage variation shall not apply in the cases where the circumstances

are reasonably beyond the control of tate Transmission ?tility ATransmission 3icensee

e.g. major break-downs, grid failures, accidents, system distress conditions, etc.

!iii" tate Transmission ?tility ATransmission 3icensee shall make all possible

efforts to ensure that the grid voltages remain within the following voltage levels at all

points of its Transmission ystem$


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Nominal 5oltage

k54

Ma6imum 5alue

k54

Minimum 5alue

k54

+99 +'9 )09

''9 '+ '99

%)' %+ %'9

)) ) )9

%%I %%.01 %9

& ''k# (oltages to )e maintained )* the transmission licensee onl* inthose cases +here ''k# su,,l* is e-tended from the EHT su)station.

)4 /afet /tandards

!i" tate Transmission ?tility ATransmission 3icensee shall observe the general

safety requirements as laid down in 8* 2ules, %C0, for construction, installation,

protection, operation and maintenance of electric supply lines and apparatus.

!ii" 2elevant rules under 8* 2ules, %C0 pertaining to safety standards and

practices shall be followed.

!iii" tate Transmission ?tility A Transmission 3icensee shall develop its own

peration and 6aintenance 6anual !including afety 2egulations

!iv" tate Transmission ?tility A Transmission 3icensee shall develop its own

peration and 6aintenance 6anual !including afety 2egulations" #lause !c" of section1) read with ection ) of the ct.

c4 Feeder &vaila)ilit

!i" The feeder availability gives the percentage of time during which the

feeder remained available for transmission. 7eeder vailability shall be calculated based

on following formula


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!ii" ubject to istribution 3icensee!s" observing the Erid #ode

#onnection #onditions in this regard, the voltage unbalance shall not exceed the values

given below$

Implementation /tage 5oltage 0evel 0imit of

voltage

un)alance


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neutral to ground. The neutral therefore shifts from earth potential. This performance

standard shall be achieved for star point of all *:T transformers having ))k@ or %%k@

on the low voltage side.

!ii" ?nbalance voltages and displacement of neutral result in decreased efficiency,

negative torque, leakage currents, vibrations and overheating. evere unbalance and

neutral displacement could lead to malfunctioning of some equipment.

!iii" The tate Transmission ?tility ATransmission 3icensee shall ensure that the

neutral point voltage of the transformers with respect to earth will not have potential

greater than 'J of the no load phase to phase voltage of the transformer.

!iv" This standard shall be implemented in the


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Transition tage S 3evel ' K 0 to be achieved for more than C9J of buses

7inal tage S 3evel ) K + to be achieved for more than C9J of buses

$4 /stem &de%uac

ystem adequacy is the ability of the electric system to receive the

generated power or supply the aggregate electrical demand and energy requirements of its

consumers at all times, taking into account scheduled and reasonably expected

unscheduled outage of system elements. dequacy of the power system is usually

measured in terms of 3oss of 3oad 1.09 %J


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i4 /stem /ecurit

ecurity is the ability of the electric system to withstand sudden

disturbance such as electric short circuit or unanticipated loss of system element, detailed

in #lause 0 of G6anual on Transmission


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period. The tate Transmission ?tility ATransmission 3icensee shall maintain the base

data like 3og heet, #omplaint 2egisters and 8nterruption 2egister and relevant load flow

studies in respect of system security etc. at sub-station level for compilation of monthly

report at circle level. The consolidated report shall be based on circle-wise compilation

for whole tate Transmission ?tility ATransmission 3icensee. The circle-wise

compilation and base data at sub-station level shall be subject to its scrutiny as considered

necessary by the #ommission.

*.2 The tate Transmission ?tility ATransmission 3icensee shall display on their website

the actual performance against the required standards on a monthly basis.

*.3 7or the purpose of this 2egulation, the half-year periods would be as follows$

!a" %st:alf year$ %stpril to )9theptember

!b" 'nd:alf year$ %stctober to 6arch )%st.

*. The #ommission may, from time to time, modify the contents of the

regulationAformats or add new regulationAformats for additional information.

*.'8n addition to the hard copies, the information shall necessarily be submitted in such

electronic form or through compact disks or e-mail as the #ommission may direct.

*.* Effectof default in compliance with the tandards

!a" #onsequent to failure of tate Transmission ?tility ATransmission 3icensee to

meet performance standards specified herein, the affected ?tilityA#onsumers shall be

entitled to seek reliefAcompensation from tate Transmission ?tility ATransmission

3icensee, as may be determined by the #ommission$


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!b" The #ommission at its own discretion may require the tate Transmission

?tility ATransmission 3icensee to furnish a report on actual performance levels

maintained against the standards specified by the #ommission with its


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provisions of this 2egulation, if the #ommission, in view of the special circumstances of

a matter or class of matters and for reasons to be recorded in writing, deems it necessary

or expedient for dealing with such a matter or class of matters.

+.*&othing stated in this 2egulation shall, expressly or implicitly, bar the #ommission

from dealing with any matter or exercising any power under the ct for which no

2egulation has been framed, and the #ommission may deal with such matters, powers

and functions in a manner it thinks fit.

E6emption

+.+ The #ommission may relax adherence to specific performance standard during 7orce

6ajeure conditions such as war, mutiny, civil commotion, riot, flood, cyclone, storm,

lightening, earthquake, grid failure, and strikeAcurfew, lockout, fire affecting the tate

Transmission ?tility5sA Transmission 3icenseeFs installations and operation activities.

+.: The #ommission under specific circumstances may also relax any provisions of

2egulation in general or in specific cases for the period!s" specified in its order!s".


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Cha,ter 0 III

,#WERIN->/!RG


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IN->/!RG ,R#FI0E

*3*#T28#8TM is one of the vital requirements in the over all

development of the economy and is therefore, appropriately called the HW$eel of

-evelopment. 8n fact, the power sector has played a dominant role in the socio-

economic development of the county. s a convenient versatile and relatively cheap form

of energy it plays a crucial role in agriculture, transport, industry and domestic sector.

:ence power has all along remained in the priority list of 8ndian planners and plan

outlays have reflected this aspect. The outlays for power sector have been around %CJ of

the total outlays for the public sector in various plan periods.

There has been a spectacular increase in the installed generating capacity

of electricity in the country. tarting with a capacity of about %)096( at the time of

independence,

espite tremendous increase in the availability of power since

independence there is acute power shortage gap between demand and supply. The per

capita consumption of power in the country is very low as compared to the position in the

developed countries.


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$O1ER SCENARIO

The power sector is at cross roads today. There is a chronic power

shortage in the country mainly attributable to demand of power continuously outstripping

the supply.

H2DEL $O1ER

8n the present global energy context, there are certain aspects, which have

acquired a new significance. The development of hydropower has to be given a major

thrust in the current decade. (e still have large untapped hydro power potential, but its

development has slowed down on account of lack of financial resources, interstate

rivalry, inefficiency of certain state electricity boards, variations in the course of the

monsoons etc. a concerted effort is imperative to overcome the hurdles and enlarge the

share of the hydro power generation in the country. This will help not only in tapping a

renewable resource of energy, but will provide essentially needed peaking support to

thermal power generation with the pattern of demand for electricity. ince the planners5

initial enthusiasm about the large hydel projects has waned somewhat, 8ndia will do well

to take resource to the #hinese pattern of micro and mini hydel projects wherever the

terrain is suitable.

The &ational :ydroelectric 0J in

%C00 to about '>J by 6arch %CC'. 6any of the problems in the power supply and power


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system in the country can be attributed inter alia to the declining hydro share in the power

system and consequent growth of thermal development in the sub-optimal manner.

Eovernment of 8ndia has recently constituted a group to identify newhydel projects on which advance action can be taken. 8n order to give a boost to the

development of hydro power more and more hydro electric projects are being planned or

being implemented in the central sector. 8n order to achieve this four #orporations have

already been set up under #entral or in joint sectors.

They are

%. &ational :ydroelectric


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MINI


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Eeo degrees #entigrade i.e. C-0 degrees 7ahrenheit.

This thermal energy does not change with respect to the outside temperature

considerably. The only change visible is very small which also has a time lag with respect

to outside temperature. The temperatures beneath the ground are rather cool !% degrees

#" when in summer and warm enough !%> degrees #" during winter. This provides the

feed for the natural air conditioning system.

Jeo ,ower /stem #peration

E*


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The systems usage of natural resources to effectively control the temperature

and ventilate at all hours, successfully creating a better, healthier and comfortable

living space.

3. ,rotects t$e Goung and t$e #ld

8n this age where child care and better health services for allespeciallyof the old have taken primary significance, the power of thissystem which minimi4estemperature differences between interior rooms helps better health keeping for the young

and the old.

. Natural ,urification

The system includes natural purification of minute impurities in the air

which are cleaned before being pumped into the house. This is done with the help of

condensed moisture which accumulates at the surface of the cobblestones and the pipes.

'. =umidit control and Jerm ,revention

?sing &atural ehumidifiers and health care material like tourmaline,

charcoal and copper the humidity is controlled and also help in germ prevention.

LEcosstem and Environment

1. Energ /aving

The most scarce resource in the world is the forms of energy availabletomankind. (ith ever increasing dependence on electricity as a mediumof energy, theinvention of alternative energy resources is a tough ask. The usage of alternative energy

form by this system greatly helps in reducing the usage of conventional electricity for air

conditioning and also helps in reducing the emission of harmful #' into the

environment.

2. =eat Island ,$enomenon Reduced

2eduction in the usage of electric air conditioning systems helps in thereduction of the heat island phenomenon.

L!uilding Structure


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1. Increased -ura)ilit

The durability of the building both exteriors and interiors is increased by

the prevention of mould and dewfall. The corrosion of the building mostly due to water

reasons and humidity is avoided by using dehumidifier5s namely ceramic charcoal and

others. This helps to maintain the good condition of the building.

2. 0ow Cost and Maintenance Friendl

ince the system is made up of several small independent units, the

maintenance is simple and the costs for the same are low.

N>C0E&R ENERJG

The planners, right from the beginning understood the importance of

nuclear energy in meeting the country5s long-term energy needs. 2ecogni4ing that

nuclear technology would be subject to a progressively restrictive technology central

regime and also that the long term strategies for exploitation of the country5s vast

thorium resources are bound to be some what different from those of most other countries

engaged in nuclear power development, tremendous emphasis was placed on achieving

self reliance in technology development. This policy has yielded rich dividends and today

one can proudly use the reali4ation of indigenous capability in all aspects of the nuclear

fuel cycle.

%. Tarapur tomic


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(ind energy is fast emerging as the most cost-effective source of power

as it combines the abundance of a natural element with modern technology. The growing

interest in wind power technology can be attributed not only to its cost effectiveness but

also to other attractive features like modularity, short project gestation and the non-

polluting nature of the technology. 8n 8ndia, the exercise to harness wing energy includes

wind pumps, wind battery chargers, stand alone wind electric generators and grid

connected wind farms. The department of non-conventional energy sources !&*" in

association with state agencies has been responsible for creating and sustaining interest in

the field.

/#0&R ENERJG

8t is believed that with just 9.% per cent of the 1,999 trillion k:4 of solar

energy that reaches the earth, planet5s energy requirement can be satisfied. *lectricity can

be generated with the help of solar energy through the solar thermal route, as well as

directly from sunlight with the help of olar


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The power sector in 8ndia is beset with a number of problems. They relate

to delays in the formulation and implementation of various projects, poor utili4ation of

capacity, bottlenecks in the supply of coal to thermal station, and its poor quality, faulty

distribution and transmission arrangements and bad planning leading to an injudicious

hydel thermal mix. *cological problems are also vexing this sector.

:urdles in environmental clearances tend to slow down completion of

power projects. #ompensatory afforestation and land acquisition have proved to be major

bottlenecks in the clearance of power projects. The main problem faced in the case of

environmental clearances is the shortage of land for compensatory afforestation. (hile

project authorities are prepared to invest funds in afforestation land, the state

governments are not able to provide the required land. The Eovernment has proposed to

set up a task force to look into clearances for power projects and speed up the clearances.

SHORT AND LON% TERM MEAS/RES TO CO$E 1ITH THE

ENER%2 SHORTA%ES3

/$ort term /trateg

%. The increased number of short gestation gas based projects to add capacity and

stabili4e power supply.

'.


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0. *ffective interconnected operation of power systems in the various regions to enable

transfer of power from surplus to deficit systems and also ensuring delivery of power

from #entral sector power plants to beneficiary states.

0ong term strateg

%. cceleration of hydro development by focusing on removing the various

inadequacies in organi4ation. 6anagement funding etc. it would be desirable and

necessary to make provision of adequate funds especially earmarks for hydro

development.

'. Tlomg 8 a larger T P


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%. '9J equity out of which at least %%J to be raised as promoter5s contribution

'. >9J of the capital investment to be raised through loans and only 9J of this amount

could be raised from public 7alls.

). ebt equity ratio has been raised up to +$%

+. 8ncrease in the prescribed rate of return for the license has been approved from the

existing %'J to %J.

. #apitali4ation of interest during construction has been permitted at the actual cost

!instead of the present %J above the 2eserve Bank rate" for the initial project as well

as for the subsequent expansions.

0. RE

Eovernment5s decision to invite the private sector to participate in the

power generation sector is most opportune and constructive approach


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Cha,ter 0 I#

O#ER#IE1O

0&NC#JR#>,


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,R#FI0E#FJEN!INJ0&NC#,#WERIN-I&4

,RI5&!E0IMI!E-

O$ERATIONS4 MAINTENANCECOM$AN2ORLANCO

5ONDA$ALLI$O1ER$RI#ATELIMITED4

Eenting 3anco


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0&NC#JR#>,,R#FI0E

3 Eroup, headquartered in :yderabad, 8ndia is one of the leading

business houses in outh 8ndia. 8t has an asset base of ? = +9 million and a turnover of

more than ? = )99 million. (ith operational experience in power plants based on Eas,

Biomass and (ind and an operating capacity of 9C 6(, 3 is heading for a

capacity of '99 6( and an asset base of ? = '. billion by the year '9%9.

3anco is a well-diversified group with activities like power generation,

engineering and construction, manufacturing, 8nformation technology !8T", and property

development. 3anco group is striving to *mpower, *nable and *nrich partner, business

associates and to be the chosen vehicle for growth for stakeholders and source of

inspiration to the society. The group is recogni4ed as a leading player in the 8ndian

economic scenario with operation in ? and ?W. 3 also has presence in #ivil

#onstruction,


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MEMER #F ,&R0I&MEN!

fter one-and-a-half decades of outstanding contribution to the industry,

2ajagopal chose to enter public life in '99). :e contested the recent elections to the

3ower :ouse of


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$t %an&o di'erse dimension of gro(th is a&hie'ed through

&on'erging rays of 'ision &reating dimensions6

W3:T8 #T8&E limited an example of the forward integration

of the company established in %CC1 located strategically beside the


47/99


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1. To work with honest purpose, strategic planning and enduring perseverance to

achieve customer satisfaction, stakeholder benefits and measurable economic

growth for the organi4ation.

$hiloso,h*

%. ssemble best people, delegate authority and don5t interfere Gpeople make the

difference

'. Business heads are entrepreneurs

). 6istakes are facts of life. 8t is response to the error that counts.

Success

%. #reate your luck by hard work

'. Trust R delegation K growth.

1ork culture

%. #ommitment, creativity, efficiency, team spirit.

,R#M#!ER/ &N- EO>I!G ,&R!NER/

The power project is promoted by 3anco group of 8ndia and is co-promoted by

%. Eenting Eroup of 6alaysia

'. !##" common wealth development corporation ?W

). !oosan" oosan heavy industries and construction co.ltd in Worea.


49/99


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Fuel Received

&aphtha fuel - Through dedicated pipeline from :


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+. #ontinual improvement in the environmental performance by minimi4ing the

emission and discharges P prevention of pollution.

. *nhancing environmental awareness among employee5s contractors and surroundingsociety.

O>&0I!G ,#0ICG

(e are committed to continually improve the quality of our performance

through the application of our Xuality policy.

%. ?tili4ing #ommercial, *ngineering and :uman 2esources, to 6inimi4e 2isks to


52/99

0K,,0/ C#MMI!MEN! !# C0E&N P /&FE EN5IR#NMEN!

7%reen )elt Management8

3anco #ommitment to re vegetation is

%. *ncourage native fauna to develop.

'. #ontribute to a reduction in green house gases

). 2educe noise level

+. 6inimi4e the effect of soil erosion.

. :elp to restore the site to a sustainable system.

0. 8mprove as the aspects of the power plant.

n going trees planting and maintaining theme are the important aspects of

environmental management program at 3.

N#I/E M&N&JEMEN!

*fforts to minimi4e noise emission from equipment and activities.

%. coustic linings around gas and steam turbines and boilers.

'. ilencers have been provided.

). &oise minimi4ation policy for equipment.

EFF0>EN! -I/C=&RJE- FR#M ,#WER ,0&N!

(ell-developed chemical laboratory to cater the need for monitoring

effluent quality as per


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C#M,&NG =IJ= 0IJ=!/

%. )0>.%++ 6( combined cycle power plant under build S operate S own arrangement

with the state government.

'. The single largest investment in ndhra . The first private sector power project to receive disbursement of finance from


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Chapter-V

FUNDS FL W STATEMENT


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Funds Flow /tatement

Introduction

The basic financial statements i.e., the balance sheet and profit and loss

account or income statement of business, reveal the net effect of various transactions on

the operational and financial position of the company. The balance sheet gives a

summary of the assets and liabilities of an undertaking at a particular point of time. 8t

reveals the financial states of the company. The assets side of a balance sheet shows the

deployment of resources of an undertaking while the liabilities side indicates its

obligations i.e., the manner in which these resources were obtained. The profit and loss

account reflects the results of the business operations for a period of time. 8t contains a

summary of expenses incurred and the revenue reali4ed in an accounting period and the

revenue reali4ed in an accounting period. Both the statement provides the essential basic

information on the financial activities of a business but their usefulness is limited for

analysis and planning purposes. The balance sheet gives a static view of the resources

!liabilities" of a business and the uses !assets" to which these resources have been put at a

certain point of time. 8t does not disclose the causes for changes in the assets and

liabilities between two different points of time. The profit and loss account, in a general

way indicates the resources provided by operations. But there are many transactions that

take place in an undertaking and which do not operate through profit and loss account.

Thus another statement has to be prepared to show the change in the assets and liabilities

from the end of one period of time to the end of another period of time. The statement is

called a statement of changes in financial position or a funds flow statement.

The 7unds 7low tatement is a statement, which shows the movement of

funds and is a report of the financial operations of the business undertaking. 8t indicates

various means by which funds were obtained during a particular period and the ways in

which these funds were employed. 8n simple words it is a statement of sources P

applications of funds.


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)eaning and &on&e*t of Funds

The term fund has been defined in a number of ways.

In a narrow sense

8t means cash only and a funds flow statement. uch a statement

enumerates net effects of the various business transactions on cash and takes into account

receipts and disbursements of cash.

In a broader sense

The term Qfunds5, refers to money values in whatever from it may exit.:ere Qfunds5 means all financial resources, used in business whether in the form of men,

material money, machinery and others.

In a Popular sense

The term Qfunds5, means working capital, i.e., the working capital concept

of funds has emerged due to the fact that total resources of a business are invested partly

in fixed assets in the form of fixed capital and partly kept in form of liquid or near liquid

form as working capital.

)eaning and &on&e*t of Flo( of funds

The term flow means movement and includes both inflow and out flow.

The term flow of funds means transfer of economic values from one asset of equity to

another flow of funds is said to have taken place when any transaction makes changes in

the amount of funds available before happening of the transaction. 8f the effect of

transaction results in the increase of funds it is called a source of funds and if it results in

the decrease of funds, it is known as an application of funds. 7urther, in case the

transaction does not change funds, it is said to have not resulted in the flow of funds.

ccording to the working capital concept of funds, the term flow of funds

refers to the movement of funds in the working capital. 8f any transaction results in the


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increase in working capital, it is said to be a source or flow of funds and if it results in the

decrease of working capital, it is said to be an application or out S flow of funds.

Rule

The flow of funds occurs when a transaction changes on the one hand a

non current account and on the other a current account and vice versa only. 8n simple

language funds move when a transactions effects

% a current asset and a fixed asset, or

' a fixed and a current liability or

) a current asset and a fixed liability or

+ a fixed liability and current liability

nd funds do not move when the transaction affects fixed assets and fixed

liability or current assets and current liabilities.

!urrent and Non+!urrent $&&ount

To understand flow of funds it is essential to classify various accounts and

balance sheet items into current and non-current categories

#urrent accounts can either be current assets or current liabilities. #urrent

assets are those assets which in ordinary course of business can be or will be

converted into cash within a short period of normally one accounting year.

#urrent liabilities are those liabilities which are intended to be paid in the

ordinary course of business with in a short period of normally one accounting year

out of the current assets or the income of the business.


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0ist of current or working capital accounts

Current 0ia)ilities Current &ssets

%. Bills payable %. #ash in hand.

'. undry creditors or accountspayable accrued or outstandingexpenses

'. #ash at bank.

). ividend payable Bank overdraft.

). Bills receivable.

+. hort-term loans advancesPdeposits.

+. undry debtors or accountsreceivable.

.


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0ist of non


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1. &nalses t$e transaction and find out t$e two accounts involved.

2. Make Dournal entr of t$e transaction.

3. -etermine w$et$er t$e accounts involved in t$e transaction are

current or non


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!$e funds flow statement descri)es t$e source from w$ic$

additional funds were derived and t$e use to w$ic$ t$ese coerces were

put.

-------&T:&M.

Funds flow statement as as a statement eit$er prospective

or retrospective setting out t$e sources and applications of t$e funds of

an enterprise. !$e purpose of t$e statement is to indicate clearl t$e

re%uirement of funds and $ow t$e are proposed to )e raised and t$eefficient utiliQation and application of t$e same

------- 8#(.8& E32M 7 6&E*6*&T ##?&T

Funds flow statement, income statement and balance sheet$

Funds flow statement is not a su)stitute of an income

statement" i.e." a profit P loss account and )alance s$eet.

& )alance s$eet is a statement of financial position or status

of a )usiness on a given date. It is prepared at t$e end of accounting

period. !$e )alance s$eet depicts various resources of an undertaking

and $e deploment of t$ese resources in various assets on a particular

date.

=ence" funds flow statement is not competitive )ut

complementar to financial statements. !$e funds statement provides

additional information as regards c$anges in working capital. It is a tool

of management for financial analsis and $elps in making decisions.


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-ifference )etween funds flow statement and income statement

Funds flow statement Income statement

%. 8t highlights the changes in the

financial position of a

business and indicates the

various means by which funds

were obtained during a

particular period and the waysto which these funds were

employed.

'. 8t is complementary to income

statement. 8ncome statement

helps the preparation of funds

flow statement.

). (hile preparing funds flow

statement both capital and

revenue item are considered.

+. There is no prescribed format

for preparing a fund flow

statement.

%. 8t does not reveal the inflow

and outflows of funds but

deposits the items of expenses

and income arrive at the figure

of profit or loss.

'. 8ncome statement is not

prepared from fund flow

statement.

). nly revenue item are

considered.

+. 8t is prepared prescribed

format.


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-ifference )etween funds flow statement P )alance s$eet

Funds flow statement alance s$eet%. 8t is a statement of changes in

financial position and hence is

dynamic in nature.

'. 8t shows the sources and uses

of funds in a particular period

of time.

). 8t is a tool of management for

financial analysis and helps in

making decisions.

+. ?sually, schedule of changes

in working has to be prepared

before preparing funds flow

statement.

%. 8t is a statement of

financial position on a

particular date and hence is

static in nature.

'. 8t depicts the assets and

liabilities at a particular point of

time.

). 8t is not of much help to

management in making

decisions.

+. &o such schedule of

changes in working capital is

required. 2ather profit P loss

account is prepared.

/ses9 significance and im,ortance of funds flo+ statement.

fund flow statement is an essential tool for the financial analysis and is of

primary importance to the financial management. The basic purpose of a funds flowstatement is to reveal the changes in the working capital on the two balance sheet dates. 8f

also describes the sources from which additional working capital has been financial and

the uses to which working capital has been applied. uch a statement is particularly

useful in assessing the growth of the firm. The significance or importance of funds flow

statement can be well followed from its various uses given below.


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1. It $elps in t$e analsis of financial operations

The financial statements reveal the net effect of various transactions on theoperational and financial position of a concern. The balance sheet gives a static view of

the resources of a business and the uses to which these resources of a business and the

uses to which have been put at a certain point of time. The funds flow statement explains

causes for such changes and also the effect of this change on the liquidity position of the

company sometime a concern may operate profitably and yet its cash position may

become more and worse. The funds flow statement gives a clear answer to such a

situation explaining what has happened.

2. It t$rows lig$t on man perple6ing %uestions of general interest

(hich otherwise may be difficult to be answered, such as

%. (hy were the net current assets lesser spite of higher profits and vice versaY

'. (hy more dividends could not be declared in spite of available profitsY

). :ow was it possible to distribute more dividends than the present earningsY

+. (hat happened to the proceeds of sale of fixed assets or issue of shares,

debentures, actY

. (hat happened to the net profitY (here did they goY

0. :ow was the increase in working capital financed and how will it be financed in

futureY

3. It $elps in t$e formation of a realistic dividend polic

ometimes a firm has sufficient profits available for distribution asdividend but yet it may not be advisable to distribute dividend for lack of liquid or cash

resources. 8n such cases, a funds flow statement helps in the formation of a realistic

dividend policy.

. It $elps in t$e proper allocation of resources


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The resources of a concern are always limited and it wants to make the

best use of these resources. projected funds flow statement constructed for the future

helps in making managerial decisions. The firm can plan the deployment of its resources

and allocate them among various applications.

'. It acts as a future guide

projected funds flow statement also acts a guide for future to the

management. The management can come to know the various problems it is going to face

in near future for want of funds. The firm5s future needs want of funds. The firm5s future

needs of funds can be projected work in advance and also the timing of these needs.

*. It $elps in appraising t$e use of working capital

funds flow statement helps in explaining haw effectively the

management has used its working capital and also suggests ways to improve working

capital position of the firm.

+. It $elps knowing t$e overall credit wort$iness of a firm

The financial institutions and banks such as state financial institutions.

8ndustrial evelopment #orporation, industrial finance corporation of 8ndia, industrial

development bank of 8ndia, etc., all ask for funds flow statement constructed for a

member of years before granting loans to know the credit worthiness and paying capacity

of the firm. :ence, a firm seeking financial assistance from these institutions has no

alternative but to prepare funds flow statement.

0IMI!&!I#N/ #F F>N-/ F0#W /!&!EMEN!

%. 8t should be remembered that a funds flow statement is not a substitute of an

income statement or a balance sheet. 8t provides only some additional information

as regards changes in working capital.


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'. 8t cannot reveal continuous changes.

). 8t is not original statement but simply is arrangement of data given in the financial

statements.

+. 8t is essentially historic in nature and projected funds flow statement cannot be

prepared with much accuracy.

. #hanges in cash are more important and relevant for financial management than

the working capital.

,R#CE->RE F#R ,RE,&RINJ & F>N-/ F0#W /!&!EMEN!

The funds flow statement is prepared by comparing two balance sheets

and with the help of such other information derived from the accounts as may be needed.

The preparation of a funds flow statement consists of two parts$

%. tatement or schedule of changes in working capital.

'. tatement of sources and application of funds.

1. /tatement or /c$edule of c$anges in Working Capital

(orking #apital means the excess of current assets over current liabilities.

tatement of changes in working capital is prepared to show the changes in the working

capital between the two balance sheet dates. This statement is prepare with the help of

current assets and current liabilities derived from the two balance sheets

s, (orking #apital K #urrent ssets S #urrent 3iabilities

i" n increase in current assets increases the working capital.

ii" decrease in current assets decreases the working capital.

iii" n increase in current liabilities decreases the working capital.iv" decrease in current liabilities increases the working capital.

typical for statement or schedule of changes in working capital is as

follows


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1. /tatement of c$anges in Working Capital

Effect in working

capital

,articulars

,revious

ear

Current

Gear Increase -ecrease

Current &ssets

#ash in hand xxx xxx

#ash at bank xxx xxx

Bills 2eceivable xxx xxx

undry ebtors xxx xxx

Temporary 8nvestments xxx xxx

tock or 8nventories xxx xxx


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2. /tatement of /ources and &pplication of Funds

7unds flow statement is a statement which indicates various sources from

which funds !working capital" have been obtained during a certain period and the

uses a applications to which these funds have been put during that period. Eenerally,

the statement is prepared in tow formats.

i. 2eport 7orm

ii. T 7orm or an ccount form or elf Balancing Type.

/pecimen of Report Form of Funds Flow /tatement

,articulars &mount Rs.4

/ources of Funds

7unds from perations xxx

8ssue of hare #apital xxx

2aising of 3ong term 3oans xxx

2eceipts from


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! Form or an &ccount Form or /elf alancing !pe Funds Flow

/tatement

/ources&mount

Rs.4 &pplications&mount

Rs.4

7unds from perations xxx 7unds 3ost in perations xxx

8ssue of hare #apital xxx2edemption of


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b" The second method !which is generally used" is to proceed from the figure

of net profit and net loss as arrived at from the profit and loss account already

prepared.

7unds from perations by this method can be calculated as under.

Calculation of Funds from #peration

,articulars &mount Rs.4

#losing balance of


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vi"


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b" 7unds from perations can also be calculated by preparing adjusted


73/99

C&/= F0#W /!&!EMEN!

IN!R#->C!I#N

#ash plays a very important role in the entire economic life of a

business. firm needs cash to make payments to its suppliers, to incur day-to-day

expenses and to pay salaries, wages, interest and dividend, etc. 8n fact, what blood is to a

human body, cash is to a business enterpriseY 8t is very essential for a business to

maintain an adequate balance of cash. But many times, a concern operates profitably and

yet it becomes very difficult to pay taxes and dividend. This may be because

lthough huge profits have been earned yet cash may not have been received.

*ven if cash has been received, it may have drained out !used" for some other

purposes.

This movement of cash is of vital importance to the management.

(e have studied in the previous chapter that the two basic financial

statements, i.e., the balance sheet and profit and loss account, provide the essential basic

information on the financial activities of a business, but their usefulness is limited for

analysis and planning purposes. The balance sheet does not disclose the causes for

changes in the assets and liabilities between two different points of time. The profit and

loss account also fails to disclose the reasons for shortage of cash in spite of positive net

income. Thus, another statement, called funds flow statement, was prepared to show the

changes in the assets and liabilities from the end of one period of time to the end of

another period of time. To underline the importance of funds statement, the institute of

#hartered ccountants of 8ndia !8#8" issued in /une,%C>% ccounting tandard-)

dealing with the preparation of statement of changes in 7inancial


74/99

meaningful link between the balance sheet at the beginning and at the end of a period and

the profit and loss account for that period.

ME&NINJ

#ash flow statement is a statement which describes the inflows !sources" and

outflows !uses" of cash and cash equivalents in an enterprise during a period of time.

uch a statement enumerates net effects of the various business transactions on cash and

its equivalents and takes into account receipts and disbursements of cash. cash flow

statement summari4es the causes of changes in cash position of a business enterprise

between dates of two balance sheets. ccording to s-) !2evised", an enterprise shouldprepare a cash flow statement and should present it for each period for which financial

statements are prepared. The terms cash, cash equivalents and cash flows are used in this

statement with the following meanings$

%. #ash comprises cash on the hand and demand deposits with banks.

'. #ash equivalents are short term, highly liquid investments that are readily

convertible into known amounts of cash and which are subject to an insignificant

risk of changes in value. #ash equivalents are held for the purpose of meeting

short-term cash commitments rather than for investment or other purposes.

). #ash flows are inflows and outflows of cash and cash equivalents. 7low of cash

is said to have taken place when any transaction makes changes in the amount of

cash and cash equivalents available before happening of the transaction. 8f the

effect of transaction results in the increase of cash and its equivalents, it is called

an inflow !source" and if it is results in the decrease of total cash, it is known as

outflow !use" of cash.

C0&//IFIC&!I#N #F C&/= F0#W/

#ash flows are classified into three main categories$

%. #ash flows from operating activities.

'. #ash flows from investing activities.

). #ash flows from financing activities.


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%. Cas$ Flows from #perating &ctivities$

perating activities are the principal revenue-producing activities of the

enterprise and other activities that are not investing or financing activities. The

amount of cash flows arising from operating activities is a key indicator of the extent

to which the operations of the enterprise have generated sufficient cash flows to

maintain the operating capability of the enterprise, pay dividends, repay loans, and

make new investments without recourse to external sources of financing. 8nformation

about the specific components of historical operating cash flows is useful, in

conjunction with other information, in forecasting future operating cash flows.

*xamples of cash flows from operating activities are$

!a" cash receipts from the sale of goods and the rendering of servicesD

!b" cash receipts from the royalties, fees, commissions, and other revenueD

!c" cash payments to suppliers of goods and servicesD

!d" cash payments to and on behalf of employees.

%. Cas$ Flows from #perating &ctivities 8nvesting activities are the acquisition and disposed of long-term assets and

other investments not included in cash equivalents. The separate disclosure cash flows

arising from investing activities is important because the cash flows represent the extent

to which expenditures have been made for resources intended to generate future income

and cash flows.

*xamples of cash flows arising from investing activities are.

!a" #ash payments to acquire fixed assets !including intangibles".

These payments include those relating to capitali4ed research P

evelopment costs and self constructed fixed assetsD

!b" #ash payments to acquire shares, warrants, or debt instruments of

ther enterprises and interests in joint ventures !other than


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). Cas$ Flows from Financial &ctivities$

7inancing activities are activities that results in changes in the si4e and

composition of the owner5s capital !including preference share capital in the case of a

company" and borrowings of the enterprise The separate disclosure of cash flows arising

from financing activities is important because it is useful in predicting claims on future

cash flows by providers of funds !both capital and borrowings" to the enterprise.

*xamples of cash flows arising from financing activities are$

!a" cash proceeds from issuing shares or other similar instrumentsD

!b" cash proceeds from issuing debentures, loans, notes, bonds, and other short-term

borrowingsD

!c" cash repayments of amounts borrowed such as redemption of debentures, bonds,

preference shares

#(EC!I5E/

%. 8nformation about the cash flows of an enterprise is useful in providing users of

financial statements with a basis to assess the ability of the enterprise to generate cash

and cash equivalents and the needs of the enterprise to utili4e those cash flows.

'. The economic decisions that are taken by user require an evaluation of the ability

of an enterprise to generate cash and cash equivalents and the timing and certainly of

their generation.

). The statement deals with the provision of information about the historical

#hanges in cash and cash equivalents of an enterprise by means of a cash flow

statement which classifies cash flows during the period from operating investing and

financing activities.

/C#,E

%. n enterprise should prepare a cash flow statement and present it for each period

for which financial statements are presented.

'. ?sers of an enterprise5s financial statements are interested in how the enterprise

generates and uses cash and cash equivalents. This is case regardless of the nature


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of the enterprise5s activities and irrespective of whether cash can be viewed as the

product of the enterprise, as may be the case with a financial enterprise, as may be

the case with a financial enterprise.

). *nterprises need cash for essentially the same reasons, however different their

/E/ &N- /IJNIFIC&NCE #F C&/= F0#W /!&!EMEN!

#ash flow statement is of vital importance to the financial management. 8t is an

essential tool of financial analysis for short-term planning. The chief advantages of cash

flow statement are as follows$

!%" ince a cash flow statement is based on the cash basis of accounting, it is very

useful in the evaluation of cash position of a firm.

!'" projected cash flow statement can be prepared in order to know the future cash

position of a concern so as enable a firm to plan and coordinate its financial

operations properly. By preparing this statement, a firm can come to know as to

how much cash will be generated into the firm and how much cash will be needed

to make various payments and hence the firm can well plan to arrange for the future

requirements of cash.

!)" comparison of the historical and projected cash flow statements can be made so

as to find the variations and deficiency or otherwise in the performance so as to

enable the firm to take immediate and effective action.

!+" series of intra-firm and inter-firm cash flow statements reveals whether the firm5s

liquidity !short-term paying capacity"is improving or deteriorating over a period of

time and in comparison to other firms over a given period of time.

!" #ash flow statement helps in planning the repayment of loans, replacement of fixed

assets and other similar log-term planning of cash. 8t is also significant for capital

budgeting decisions.


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!0" #ash flow analysis is more useful and appropriate than funds flow analysis for

short-term financial analysis as in a very short period it is cash which is more

relevant then the working capital for forecasting the ability of the firm to meet its

immediate obligations.

!1" #ash flow statement provides information of all activities classified under

operating, investing and financing activities, the funds statement even when

prepared on cash basis, did not disclose cash flows from such activities separately,

Thus, cash flow statement is more useful than the funds statement.

0IMI!&!I#N/ #F C&/= F0#W /!&!EMEN!/

espite a number of uses, cash flow statements suffer from the following limitations$

!%" s cash flow statement is based on cash basis of accounting, it ignores the basic

accounting concept of accrual basis.

!'" ome people feel that as working capital is a wider concept of funds, a funds flow

statement provides a more complete picture than cash flow statement.

!)" #ash flow statement is not suitable for judging the profitability of a firm as non-

cash charges are ignored while calculating cash flows from operating activities.

,RE,&R&!I#N #F C&/= F0#W /!&!EMEN!

The #ash 7low tatement is to be presented as per the -) of the 8nstitute of

#hartered ccountants of 8ndia !8#8". The 8#8 issued -)in /une, %C>% for the first

time. 3ater in 6arch, %CC1 it revised the standard. The model stipulated in -) is the

widely accepted model for presentation of #ash 7low tatements.

ll the listed companiesAentities whose financial year ends on 6arch, %CC0

and thereafter will be required to give #ash 7low tatement along with Balance heet

and


79/99

-I/!INC!I#N E!WEEN F>N-/ F0#W /!&!EMEN! &N-

C&/= F0#W /!&!EMEN!

Funds Flow /tatement Cas$ Flow /tatement

!%" 8t is based on accrued basis ofccounting.

!'" 7unds flow statement is concerned withchanges in (orking #apital positionBetween two Balance heet.

!)" 7unds flow statement is based on awider concept of funds i.e., working#apital.

!+" schedule of (orking capital changesis prepared in the case of 7unds 7lowtatement.

!" 8t shows the changes of not only cashbut also of other current assets likedebtors, stock etc

!0" The statement does not start with anyopening of balance of any account anddoes not even and with any such

closing balance of any account.!1" 8t shows the changes in the currentliabilities like sundry creditors, bills" 8n this case, the profit from operationor the net profit is considered as a


80/99

,RE/EN!&!I#N #F C&/= F0#W /!&!EMEN!

(hile preparing the cash flow statement, cash flows from operating activities

are presented first, followed by investing activities and then financing activities. The

individual inflows and outflows relating to investing and financing activities are

presented separately in their respective categories. The operating activities section can be

presented using the direct method or indirect method. 8n the direct method cash flow


81/99

statement is presented primarily on a cash receipts and cash payments basis, instead of on

accrual basis. 8n the indirect method, net income is adjusted for items that affected net

income but did not affect cash.

-irect Met$od$

Format of Cas$ Flow /tatement

,articulars&mount

Rs

&mount

Rs. #ash 7lows from perating ctivities #ash 2eceipts$

ales 8nterest 2eceived

#ash payments for


82/99

. #ash 7low from perating ctivities$ &et 8ncome

djustments to 2econcile &et income to &et cash


83/99

Chapter-VI

DATA ANALYSIS

,articulars 2;11 2;12 Increase -ecrease

Current &ssets

undry debtors >91%'>9+ )1>0+'9 +'>0)>+


84/99

#ash and bank )+9+)'9 %0C9)'0 %10+0>90

ther current assets %'''> >11) 19'

3oans and advances 1))%0 C')19C %C9%C)

!otal Current &ssets 11'*2;*: 132:2;: Current 0ia)ilities

#urrent liabilities '%C0C%0 )>C%'0 %0CC+)+C

00C1+ >'C)+ %+)>%%

!otal Current 0ia)ilities 3;2****1 +11+1

Working Capital C& C,>

ther #urrent ssets >1,1) >)+,C0) '',1C9

3oans and dvances C'),19C >C,C%C '1,1C9

!otal Current &ssets

1"32:"2;

:

+2";21";:

1

Current 0ia)ilities

#urrent 3iabilities)>,C%,'0

>,9+,>'1)9,)0,+)

>

,',C)+ >,9%9,1C+ %,%+9

!otal Current 0ia)ilities

+"11+"1

1*";*'"*2

1

1"3;+"12

+

31";'1"'+

:

Net Working C& < C04

++,'%%,99C

,C,+09

ecrease in (orking#apital

%%,1++,+%

%%,1++,+%

''"''"*

;

''"''"*

;

31";'1"'+

:

31";'1"'+

:

/ources

&mount

Rs4 &pplications

&mount

Rs4

ecrease in (orking #apital %%,1++,+% 7unds 3ost in peration %),11,+9C

#hange of epreciation on7ixed ssets ',9>9,)%1

ecrease in eferred Tax3iability 01,)C

13":2"+*: 13":2"+*:

C$anges in Work


86/99

,articulars 2;; 2;1; -ecrease

Current &ssets

#ash and Bank )>,9'),0)+ C,>'C,)'1 '>,%C+,)91undry ebtors )','00,0 >,C9',C'0 '0,0)0,)0%

ther #urrent ssets >)+,C0) 1C,))0 1,0'1

3oans and dvances >C,C%C C),11 1,>)>

!otal Current &ssets +2";21";:1 *"+*'"3*

Current 0ia)ilities

#urrent 3iabilities >,9+,>'1 )9,>1,C%) '',>'%,9>0

,9%9,1C+ %,99>,19) 1,99',9C%

!otal Current 0ia)ilities 1*";*'"*21 31"::"*1* '1"++1";2; 33"**"2;

Net Working C& < C04 ,C,+09 )1,>>9,1)9

ecrease in (orking #apital %>,91+,1)9 %>,91+,1)9

''"''"*; ''"''"*; '1"++1";2; '1"++1";2;


/ources

&mount

Rs4 &pplications

&mount

Rs4

Funds From Operation %0,C'C,''18ncrease in (orking#apital %>,91+,1)9

#hange of epreciation on7ixed ssets %,),+%

ecrease in iffered Tax3iability )>C,C+>

1:"*"*+: 1:"*"*+:

C$anges in Work


87/99

,articulars 2;;: 2;; Increase -ecrease

Current &ssets

#ash and Bank C,>'C,)'1 'C,'1,C+ %C,+'>,0%>undry ebtors >,C9',C'0 '>,)++,%)) )9,>,1C)

ther #urrent ssets 1C,))0 1),'91 0,>1%

3oans and dvances C),11 ')0,>00 1%0,>C%

!otal Current &ssets *"+*'"3* ':"'+"1'1

Current 0ia)ilities

#urrent 3iabilities )9,>1,C%) ',)),10 '>,'',%1

,19) ,9,%C0 +,+%,+C)

!otal Current 0ia)ilities 31"::"*1* +";3"'2 3'":1+"1++ :"*;*"**

Net Working C& < C04 )1,>>9,1)9 9,019,%CC

ecrease in (orking #apital %',1>C,+0C %',1>C,+0C

';"*+;"1 ';"*+;"1 :"*;*"** :"*;*"**


/ources

&mount

Rs4 &pplications

&mount

Rs4

ecrease in (orking #apital %',1>C,+0C7unds 3ost inperation )%,9%0,1+

#hange of epreciation on 7ixedssets %,)','C

8ssue of hare #apital %0,0)C,)09

8ncrease in iffered Tax 3iability '0',01

31";1*"+' 31";1*"+'

C$anges in Work


88/99

,articulars 2;;+ 2;;: Increase -ecrease

Current &ssets

#ash and Bank 'C,'1,C+ '),9+0,9+> 0,'%%,>C1

undry ebtors '>,)++,%)) %9,'9>,1++ %>,%),)>Cther #urrent ssets 1),'91 1),'91

3oans and dvances ')0,>00 0>,C01 ))',%9%

!otal Current &ssets ':"'+"1'1 33":23"+'

Current 0ia)ilities

#urrent 3iabilities ',)),10 ),19+,)C> %,)9,0+'

'',1%% ),1'1,+>

!otal Current 0ia)ilities +";3"'2 '"'2+"1; 2*"33"13' ";'"':*

Net Working C& < C04 9,019,%CC '>,'C0,09

ecrease in (orking #apital '',)1),+C

';"*+;"1 2:"2*"*'; 2*"33"13' 2*"33"13'


/ources

&mount

Rs4 &pplications

&mount

Rs4

7unds 7rom perations C9,0>8ncrease in (orking#apital '',)1),+C

#hange of epreciation on 7ixedssets %>,1>>,+1+

8ncrease in iffered Tax 3iability ',C>C,999

6iscellaneous expenses ,)C9

22"3+3"' 22"3+3"'

e!so"s#


89/99

The sundry debtors increased in the year '9%% when compared with '9%9 because

there is an increased in P6 fee.

The cash and bank balance of '9%% is decreased due to the payment of dividends

declared in '9%9

The loans and advances include employee claims and deposits with governmentD

in the year '9%%, the loans and advances are decreased because, the employees set

off their claims.

The other current assets majorly include interest on deposits. The interest is

decreased because the deposits are used for the payment of dividend.

8n the case of current liabilities there is a decreased in the year '9%%. The provisions are also increased, the additional provision is created for, raised

sundry debtors.

7or the purpose of preparation of 7unds 7low tatement we have to

calculate the changes in (orking #apital.

The excess of #urrent ssets over #urrent 3iabilities is called &et

(orking #apital.

I"te$%$et!tio"The (orking #apital tatement treated as$

The undry debtors are increased in +',>0,)>+A- the year '9%% as compared to

the year '9%9.

The #ash and Bank balances are decreased in %1,0+0,>90A- the year '9%% as

compared to the year '9%9. Because the Eenting 3anco company has paid the

dividends in '9%9.

The ther #urrent ssets are also decreased in 1,9,'A- the year '9%% as

compared to the year '9%9. Because the company canceled the dividends in '9%9.

The interest is decreased that is the reason #urrent ssets are decreased in '9%%.


90/99

The 3oans and dvances are also decreased in %,C9,%C)A- the year '9%% as

compared to the year '9%9. Because here the company set-off the *mployee5s

claims.

The #urrent 3iabilities are decreased in %0,CC+,)+CA- the year '9%% as compared

to the year '9%9. Because additional consultancy provided by the company.

The %%A- the year '9%% as compared to the year

'9%9. Because the sundry debtors are increased.

The verall (orking #apital is increased in +%,%0+,)C>A- the year '9%%.

8n 7unds 7low tatement the 7ixed ssets are treated as source because

depreciation of fixed assets are decreased in >, C),CCA- the year '9%%, the reasonis 7ixed ssets does not purchase by the company.

eferred tax liability is decreased in ), %,C''A- the year '991.

I"te$%$et!tio"

The (orking #apital treated as$

The undry debtors are increased in ,>C,>A- the year '9%9 as compared tothe year '99C.

The #ash and Bank balances are increased in %),000,0C'A- the year '9%9 as

compared to the year '99C.

The ther #urrent ssets are increased in '',1C9A- the year '9%9 as compared to

the year '99C.

The 3oans and dvances are also increased in '1,1C9A- the year '9%9 as compared

to the year '99C.

The #urrent 3iabilities are also increased in )9,)0,+)>A- the year '9%9 as

compared to the year '99C.

The


91/99

I"te$%$et!tio"

The (orking #apital treated as$

The undry debtors are decreased in '0,0)0,)0%A- the year '99C as compared to

the year '99>.

The #ash and Bank balances are increased in '>,%C+,)91A- the year '99C as

compared to the year '99>.

The ther #urrent ssets are increased in 1,,0'1A- the year '99C as compared to

the year '99>.

The 3oans and dvances are decreased in 1,>)>A- the year '99C as compared to

the year '99>.

The #urrent 3iabilities are decreased in '',>'%,9>0A- the year '99C as compared to

the year '99>.

The ,1C)A- the year '99> as compared to

the year'991.

The #ash and Bank balances are decreased in %C,+'>,0%>A- the year '99> as

compared to the year '991.

The ther #urrent ssets are decreased in 0,,>1%A- the year '99> as compared

to the year '991.


92/99

The 3oans and dvances are increased in 1,%0,>C%A- the year '99> as compared

to the year '991.

The #urrent 3iabilities are increased in '>,'',%1A- the year '99> as compared

to the year '991.

The ,))C,00A- the year '99> because

here, the company declared the dividends...

I"te$%$et!tio"

The (orking #apital tatement treated as$

The undry debtors increased in %>,%),)>CA- the year '991 as compared to the

year'990.

The #ash and Bank balance is increased in 0,'%%,>C1A- the year'991 as compared

to the year '990.

The ther #urrent ssets are also increased in 1,),'91A- the year '991 as

compared to the year '990.

The 3oans and dvances are decreased in )),'%9A- the year '991 as compared to

the year '990.

The #urrent 3iabilities are decreased in %,)9,0+'A- the year '991 as compared to

the year '990.

The


93/99

I0I#JR&,=G

REFFERE- ##K/

78&S 6&E*6*&T - 8. 6.


94/99

$,,N-I

alance s$eet as on 31st Marc$ 2;11

&mount in Rs.4

,articulars 2;1; < 11 2;; < 1;

/#>RCE/ #F F>N-/

14 /=&RE=#0-ER/S F>N-/

!a" #apital %>,1%C,'>9 %>,1%C,'>9

!b" 2eserves and urplus 1>,)+9,1)) )1,1+,)1'

C1,909,9%) 0,+1),0'

24 -EFFERE- !&9 0I&I0I!G ',+1>,+'> ',1C+,)9

!#!&0 CC,)>,++% C,'0>,99'&,,0IC&!I#N #F F>N-/

14 FI9E- &//E!/

!a" Eross Block )%,91,C0 'C,101,C1C

!b" 3ess$ epreciation %0,>C+,0' %+,1%9,C>0

!c" &et Block %+,%0),9)+ %,90,CC)

24 C>RREN! &//E!/" 0#&N/ &N- &-5&NCE/

!a" undry ebtors >9,1%',>9+ )1,>0,+'9

!b" #ash and Bank Balances )+,9+),'9 %,0C9,)'0

!c" ther #urrent ssets %',''> >1,1)

!d" 3oans and dvances 1)),%0 C'),19C

%%,0+',90> C%,)'>,'9>

0E// C>RREN! 0I&I0I!IE/ &N- ,R#5I/I#N/

!a" 3iabilities '%,C0,C%0 )>,C%,'0

!b" ,00C,1+ >,',C)+

)9,'00,00% +1,%%1,%CC

NE! C>RREN! &//E!/ >,)1,+91 ++,'%%,99C

!#!&0 CC,)>,++% C,'0>,99'


95/99

,rofit and 0oss &ccount for t$e period ended on 31st Marc$ 2;11

&mount in Rs.4

,articulars 2;1;< 11 2;; @ 1;

I.INC#ME

8ncome from ervices C0,0+,C9' ,9,0+C

ther 8ncome ',)C>,''9 ','>,>C0

!#!&0 CC,9),%'' 1,>)0,+

II.E9,EN-I!>RE

dministrative and ther *xpenses >%,))+,19 1,CC,1%C>%,))+,19 1,CC,1%C

3ess$ *xpenditure 2eimbursable under perations

and 6aintenance greement +C,+1+,)9 +C,)+C,>C'

!#!&0 )%,>09,++ '0,'+C,>'1

III. ,R#FI! EF#RE -E,RECI&!I#N &N- !&9&!I#N 01,%C',011 )%,>0,1%>

9%

9

urplus brought forward from %

5I. ,R#FI! &5&I&0&0E F#R &,,R#,RI&!I#N/ 01,'>,0%1 0),'%%,+)%

Transfer to Eeneral 2eserve - +,+C,%>

8nterim ividend 2s.% per equity hare !'99- &83" - '>,91>,C'9

,90C

5II. &0&NCE C&RRIE- !# &0&NCE /=EE! 01,'>,0%1 '0,0CC,'1

Earnings ,er /$are < asic P -iluted 22 1;


96/99


97/99


98/99


99/99

funds flow statement project

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